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Whole Life Insurance

 

Whole Life insurance (sometimes known as Permanent Insurance) differs from term life insurance in that the policy remains in force for the insured's entire life as supposed to only the period in which policy premiums are made. Because of this, some Whole Life insurance policies are also useful as investment vehicles, since their value can grow over time just like stocks or mutual funds. The interested UK buyer has various options available to them when shopping for a Whole Life policy.

There are four main Whole Life policy types for interested UK Buyers. All four types have different options for premium payment and cash accrual.

The Traditional type guarantees a minimum rate of return on the policy's cash value. These are usually paid to the policyholder as dividends, but some products allow for reinvestment of the dividends. These policies require that the premiums are paid up to either death or to the insured's 100th birthday. In the event of death, the death benefit of the policy is equal to its accrued cash value.

Similar to the Traditional type is the Limited Pay policy. While the insured is still covered for their entire life, the premiums are compressed into a smaller time period. The premium amounts are higher, but the payments are not required for the entire life of the policy. This kind of policy is perfect for someone planning retirement, since they won't be saddled with a policy payment during their non-working years. Most Limited Pay policies require a payment period of at least 10 years, with the payment period ending by the time the insured reaches the age of 65.

Interest Sensitive Whole Life policies are similar to the Traditional type, but they don't pay dividends on the cash value of the policy. Instead, the cash value increases over time. This fact makes the Interest Sensitive insurance type perfect as an investment vehicle for those UK buyers interested in a different kind of investment for their portfolio.

Finally, the last option for Whole Life insurance is the Single Premium. This option is perfect for people who just received an inheritance or another large sum of money, since the entire policy premium is paid up front. Single Premium policies also accrue cash value over time, and a policy can be tailored to provide the dividend payment vs. cash value accrual options typical of the Traditional or Interest Sensitive insurance types.

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